Minimum value is a term that is used in the Affordable Care Act. It's a term used to describe the level of coverage a group plan must provide. This term is important because it helps you qualify for a subsidy in the exchange if your employer-sponsored health insurance doesn't meet minimum value.
Minimum Value Standard
The minimum value requirement is one out of 10 requirements which must be met for a qualified health insurance plan to be eligible for a subsidy. This standard ensures that the plan offers coverage of at least 60% for average medical costs, and substantial coverage for physician and inpatient hospital services. This coverage will usually be included in a plan’s summary benefits and coverage (SBC).
Minimum value definitions
Minimum value is a term that's specific to the ACA. It means an employer-sponsored plan has to provide employees with adequate coverage. The plan's coverage must be sufficient to meet a specific threshold called the actuarial cost, based off the average price of medical services.
Essentially, a plan must provide at least 60 percent of its actuarial value in order to qualify for a premium tax credit. This may seem like a small amount, yet it's important because it allows workers to obtain coverage at a price lower than what they would otherwise pay.
The terms "minimum", "maximum", and "minimum value" are used in math to refer to the smallest, and the largest values that can be found for a function within a certain domain. These terms are commonly used in math analysis and without understanding them, it's hard to know the meaning of these types of numerical data.
It is important to know that minimum value differs from other concepts and terminologies. In some cases, the terms "minimum value" and "minimum essential coverage" are often confused with each other.
The confusion is exacerbated by the fact that both terms are used in different ways and have different definitions within the ACA. A plan that meets the minimum essential coverage requirements of the ACA must cover the ten essential benefits.
A plan that does not provide the minimum essential coverage will still need to cover some or all of the 10 essential health benefits to qualify for a tax credit. Because the ACA stipulates that each individual must have health coverage.
It is important to understand this confusing concept. If you do not meet the minimum requirements of coverage for your health, you are liable to pay a penalty known as individual responsibility.
According to the Affordable Care Act, "minimum coverage" is "coverage which provides a minimal level of protection." This includes health insurance through the job, policies on the individual market, Medicare and Medicaid, CHIPs, TRICARE, and other coverage.
ACA also requires any health plan offered to employees by their employers to offer a certain percentage as essential health services (EHS). Included are things such as preventive services (such as vaccinations), prescription drugs and maternity benefits. Some employers will also have to offer other EHBs like dental or vision.